{"id":22095,"date":"2018-08-22T01:00:17","date_gmt":"2018-08-21T15:00:17","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=22095"},"modified":"2018-08-22T01:00:17","modified_gmt":"2018-08-21T15:00:17","slug":"no-guts-no-gain-simon-pressley","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/no-guts-no-gain-simon-pressley\/","title":{"rendered":"No guts \u2013 no gain \u2013 Simon Pressley"},"content":{"rendered":"

Imagine, if you will, that two years ago you had the opportunity to invest a relatively small sum of money in a property in a location that no one was talking about.\u00a0\u00a0 In fact, most people were talking that particular location down.\u00a0 Would you do it?\u00a0 Simon Pressley<\/strong> tells us the story of someone who had the guts to do it and it paid off big time.<\/p>\n

Transcript:<\/strong><\/p>\n

Kevin:<\/strong>\u00a0 Imagine, if you will, that two years ago, you had the opportunity to invest a relatively small amount of money in a property location that, well, no one was really talking about. In fact, most people were trying to talk it down. What would you do? Would you do it?<\/p>\n

Well, Simon Pressley from Propertyology knows someone who did, and it\u2019s a great success story that I wanted to share with you today.<\/p>\n

G\u2019day, Simon. How are you doing?<\/p>\n

Simon:<\/strong>\u00a0 Really well, Kevin. Thank you for the opportunity to share this amazing story.<\/p>\n

Kevin:<\/strong>\u00a0 It is an amazing story, and I think it\u2019s one we can learn a lot from. Okay, walk us through it. Who was it?<\/p>\n

Simon:<\/strong>\u00a0 It\u2019s a Sydney-based investor who reached out to us a couple of years ago. I\u2019ll come back to what the actual results that this investor achieved, but how it was brought to our attention was just a couple of months ago, this same client contacted to us two years after we helped him buy, and he was in the middle of working with his broker to get a pre-approval in place so that he could invest with us again.<\/p>\n

He contacted us with great excitement, and he said \u201cI\u2019m getting my pre-approval. The bank has revalued my property. We paid $395,000 for it. Two years later, it\u2019s worth $540,000.\u201d That\u2019s an official bank valuation in only a two-year period, and this person has not spent a single cent on renovations or anything like that. That\u2019s how we know it\u2019s a factual valuation. We\u2019re not talking about changing median values or anything like that.<\/p>\n

But he also recalled that when he contacted us to invest two years earlier and we recommended a particular location, which was Hobart back then, it took some convincing because back then, Hobart was getting a lot of negative press and hadn\u2019t done much for too long. And it\u2019s fair to say he\u2019s pretty grateful that he supported our recommendation.<\/p>\n

Kevin:<\/strong>\u00a0 Was there any hesitancy there from him when you suggested it?<\/p>\n

Simon:<\/strong>\u00a0 No, not hesitancy. I guess it was a surprise recommendation, but once we stepped him through what we knew about the market, why it performed poorly before, why we thought it was going to perform well in the future, it all made sense.<\/p>\n

I guess the trouble is it\u2019s very easy for members of the general public to get caught up in perception without actually focusing on the numbers. And the drivers. When we did that for this particular client, it all made sense. As I said, he certainly is very grateful that we brought Hobart back to his attention.<\/p>\n

Kevin:<\/strong>\u00a0 This is one of the difficulties I think a lot of investors have, Simon, and that is they need to take the emotion out of this, don\u2019t they? You need to look at it as a business.<\/p>\n

Simon:<\/strong>\u00a0 You do need to look at it as a business. You need to get past whether you\u2019d live there, whether you would or wouldn\u2019t live there, because the objective of investing has nothing to do with that, of course.<\/p>\n

It\u2019s understanding what are the things that actually influence property prices and then looking at those things in isolation, stacking them up, and then forming a bit of a picture of how that might change in the coming years. Is it a good picture, or is it a not so good picture? When we did that with Hobart a few years back, it was a very exciting picture and that\u2019s certainly how it\u2019s unfolded.<\/p>\n

This is also a great example of the power of leveraging. This particular property, Kevin, the purchase price was $395,000. The investor\u2019s own deposit money, if you like, was $75,000, so that was their equity, not a huge sum. A bank loan of $320,000 obviously. But with what the property value has grown by, that equity has increased from $75,000 initially to $220,000 in just two years.<\/p>\n

Now I\u2019ve done the calculations for those listening to this interview. That\u2019s a 290% increase in two years, from $75,000 to $220,000 in just two years. What would you have made if you put $75,000 in the bank for two years?<\/p>\n

Kevin:<\/strong>\u00a0 Yes, that\u2019s the capital growth. Then, of course, you have the return on the investment, haven\u2019t you? It\u2019s returning money for you as well.<\/p>\n

Simon:<\/strong>\u00a0 That\u2019s right. This is a really unique situation where Hobart has capital growth and extreme rental growth, so not only has his initial equity increased by 290% but the property is cash flow positive, so he\u2019s getting the double benefit there. It\u2019s putting money in his pocket each and every year, and the asset value is already grown significantly in just two years \u2013 and that market continues to grow.<\/p>\n

Kevin:<\/strong>\u00a0 I think I remember reading the blog article you wrote about this, and it\u2019s getting a rental return now of almost $500 a week, isn\u2019t it?<\/p>\n

Simon:<\/strong>\u00a0 Yes, that\u2019s right. For an asset that was purchased for less than $400,000 and interest rates that look like remaining very, very low for many years yet, yes, it\u2019s cash flow positive.<\/p>\n

Kevin:<\/strong>\u00a0 Hobart, of course, you\u2019re the first person I know of to actually tip that market when everyone else was saying it\u2019s not even worth looking at. Are there any more Hobarts on the horizon? I don\u2019t expect you to name them, of course \u2013 that\u2019s your IP \u2013 but are there any on the horizon?<\/p>\n

Simon:<\/strong>\u00a0 I would love to say there are dozens of them. There aren\u2019t, in our professional opinion \u2013 and I hope we\u2019re proven wrong \u2013 but there are a couple. There\u2019s one market that we\u2019re investing in at the moment that in the space of a few months, we\u2019ve seen buyer competition go through the roof. We got in just at the start of the growth cycle, but I think we\u2019ll be out of there by Christmas before it becomes public knowledge that this market is performing particularly well.<\/p>\n

But yes, there are a few. And in any calendar year. there are always some. It just depends whether there are lots or just a couple. Here and now, there are just a couple we feel.<\/p>\n

Kevin:<\/strong>\u00a0 Are they regional markets?<\/p>\n

Simon:<\/strong>\u00a0 They are regional markets, yes. I can\u2019t see any capital city in Australia producing double-digit price growth in the next year or two. Beyond that, anything is possible, of course. If it does happen, it\u2019s going to be capital city markets that haven\u2019t already been through a growth cycle.<\/p>\n

So, in no particular order, it\u2019s going to be the likes of Adelaide, Brisbane, Perth. Darwin has got too many troubles, I think. But those three capital cities, logic would suggest would be the most likely to have double-digit growth, but I\u2019m not expecting it to happen in the near term.<\/p>\n

Kevin:<\/strong>\u00a0 If you\u2019d like to know a little bit more, reach out and talk to the team at Propertyology. Reach them through the website, Propertyology.com.au, through our website, Real Estate Talk. That\u2019ll take you there. Or you can ring them on 1-300-65-4070.<\/p>\n

Simon Pressley, thanks for your time.<\/p>\n

Simon:<\/strong>\u00a0 Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

Imagine, if you will, that two years ago you had the opportunity to invest a relatively small sum of money in a property in a location that no one was talking about.\u00a0\u00a0 In fact, most people were talking that particular location down.\u00a0 Would you do…<\/p>\n","protected":false},"author":176692473,"featured_media":22088,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,33,10,11,13,36,22,25,27],"tags":[101],"class_list":["post-22095","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-case-studies-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"\nNo guts \u2013 no gain \u2013 Simon Pressley - 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